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MBA LEADERSHIP DEGREETRAINING BOOKSECOND EDITIONBY INTERNATIONAL MBA INSTITUTE www.mba-institute.org COPYRIGHT INTERNATIONAL MBA INSTITUTE

DedicationTo all of the International MBA Institute students, thank you for inspiring us, keeping usfocused, and making sure we do our best to help you grow in your career with your skillsand knowhow. Without you, your engagement and your loyal support, International MBAInstitute could not come where it is today.

TABLE OF CONTENTSCLICKABLEWELCOME .5ABOUT INTERNATIONAL MBA INSTITUTE .6Leadership - An Introduction .7Key Elements of Leadership .11Leadership Theories .15Iowa and Michigan Studies .17Likert's Four Systems of Management .21The Managerial Grid .23Situational or Contingency Theories .26Vroom-Yetton Model .33Motivation of Employees .42Classification of Motivation Theories .44Thank you .48

WELCOMEHi! I’m Yeliz.I love that you are taking your time to read your MBAbook. I want to briefly share with you why we wantedto write this book for you and how you can get thebest use out of it.Within the context of our MBA degrees we made athorough research in MBA education space.The conclusion was: We failed to find one singletextbook, we could sincerely recommend to ourstudents!We talked to our successful students and found outthat, almost none of the MBA books in the marketcould really help them make a smooth entry to MBAknowhow and practical business execution space.Significant number of MBA books in the marketplaceclaim that they cover all details of MBA, but whatthey are not telling is that, they don't haveunderstandable, clear and logical content to helptheir readers comprehend and most importantly loveMBA!Therefore, we wrote for you MBA books and broughtthem for your service!We are absolutely confident that your MBA books willmake you proficient in MBA subjects, so that you willhave an outstanding opportunity to love MBA andkeep on taking the tangible benefits of being an MBAprofessional.Take some coffee to enjoy and some paper totake your notes, and spend some quiet time toread your MBA books!Afterwards you will have a great understandingabout MBA domains and be prepared to pass yourMBA degree exam. You will be ready to deliver greatproducts and services to your clients and employersand to build your bright career and future!Yeliz ObergfellVice President - Student ExperienceInternational MBA Institute 5

ABOUT INTERNATIONAL MBA INSTITUTE International MBA Institute is an independentinstitute which helps organisations and professionalsget accredited with worldwide renowned and validMBA degrees and prove their competence in MBAdomains. We empower professionals worldwide tobuild their careers, and companies to create and selltheir outstanding products and services.Your MBA Leadership , MBA Management , MBASales , MBA Human Resources , MBA Finance ,MBA Marketing , MBA Business Strategy and MBARecruitment degrees have proven their worldwideacceptance and reputation by being the choice ofmore than 987’000 MBA professionals in 143countries.MBA is a set of open business execution, product,service delivery and leadership frameworks, and yetbefore International MBA Institute was established,there used to be no reasonable way for MBApractitioners like yourself to obtain your accreditedMBA degrees and to prove your competence in MBAdomains. MBA practitioners had to pay expensivefees for the one way profit-driven MBA degrees ofother MBA education providers.International MBA Institute aims to remove thesebarriers set in front of the MBA professionals indeveloped and emerging markets by saving themfrom paying unreasonable fees for MBA classroomtrainings and MBA degree examinations before theyaccredited their knowhow in MBA Domains.Moreover, feel free to check out "What makes YourMBA Degrees Best of the Industry?" section on ourwww.mba-institute.org web portal to read why weperform and serve you far more better than ourcompetition.International MBA Institute provides 8 major onlineMBA degrees which are designed by our consortiumof renowned business and people Leaders, coaches,mentors, experts and authorities from all majorindustries. You can check your MBA degrees fromthis List of MBA Degrees.6

Leadership - An IntroductionIn this chapter, you will: Understand the definition and meaning ofleadership.Your success or failure as manager depends on yourleadership qualities. You can be a successful leaderby helping subordinates to find solutions to theirproblems. You are involved with bringing togetherresources, developing strategies, organizing andcontrolling activities in order to achieve objectives. Atthe same time you, as leader, have to select the goalsand objectives of an organization, decide what is tobe done and motivate people to do it. Thus,leadership is that function of management which islargely involved with establishing goals andmotivating people to help achieve them. Leaders setgoals and help subordinates find the right path toachieve these goals.A person may be an effective manager — a goodplanner, and an organized administrator — but lackthe motivational skills of a leader. Another may be aneffective leader — skilled at inspiring enthusiasmand devotion — but lack the managerial skills tochannel the energy he/she arouses in others. Giventhe challenges of dynamic engagement in today’sbusiness world, most organizations today are puttinga premium on managers who also possessleadership skills.Definition and Meaning of LeadershipHarold Koontz and Heinz Weihrich have definedleadership as the art or process of influencing peopleso that they will strive willingly and enthusiasticallytowards the achievement of group goals. In otherwords, leadership is the ability to persuade others towork towards defined objectives enthusiastically. It isthe human factor, which binds a group together andmotivates it towards goals. Leaders help a groupattain objectives through the best use of itscapabilities.Based on the above definition, some of the featuresof leadership can be set out as follows: Leadership is the use of non-coercive influenceto shape the group or organization’s goals, andmotivate behavior towards the achievement ofthose goals. It is a process in which you exert influence overothers. Leadership involves other people - employeesor followers - who by the degree of their7

willingness to accept direction help to definethe leader’s status.It involves authority and responsibility, in termsof deciding the way ahead and being heldresponsible for the success or failure inachieving the agreed objectives.Leadership involves an unequal distribution ofpower between leaders and group members.Group members are not powerless; they canand do shape group activities in a number ofways. Still, the leader will usually have morepower.used by most successful managers to bring out thebest from their subordinates.12Leadership involves the application of certain values.Leadership based on moral principles requires thatfollowers be given enough knowledge of alternativesto make intelligent choices when it comes toresponding to a leader’s proposal.Methods for Developing Effective LeadersThe keys to an organization’s success are managerswho are able to inspire subordinates to performexceedingly well. Substantial research has beenundertaken to arrive at a description of a ‘goodmanager’ so that the desirable traits can beidentified and measured. The following methods are3Proper use of management by objectives:Management by objectives is a very effectivetechnique for establishing specific andchallenging goals. Once managers define clear,specific and challenging goals, they providedirection to subordinates. Managers can alsohelp subordinates if they encounter anyproblems.Providing employees meaningful andinteresting work: Subordinates have aninherent desire for achievement. Managersshould provide work which is interesting andchallenging, to subordinates. Moreover, thesubordinates should be rewarded when theyperform a task well. Finally, as they gainexperience and become proficient in theirwork, subordinates should be given higherresponsibilities.Focusing on improving communicationskills: Managers should remove all majorbarriers to effective communication. Them a n a g e r m u s t c o m m u n i c a t e c l e a r l y,specifically and unambiguously when givinginstructions. The leader should not only be8

45able to communicate well, but should also be agood listener. By being a good listener,managers will be able to understand employeeconcerns and can address them in anappropriate manner. Another important aspectmanagers must take care of is feedback. Theyshould provide necessary feedback tosubordinates so that they can improve theirperformance.Using an effective performance appraisalfor subordinates: The manager shoulddetermine how well the subordinate hasperformed. The actual performance should becompared with the desired results.Performance appraisal should reward andreinforce effective employee performance. Theappraisal should also highlight the areas ofconcern, and show subordinates how toimprove their performance.Pro per del egati o n o f au th o ri ty an dresponsibility: The manager should giveadequate authority and responsibility tosubordinates to perform the appointed task.The motivation level of subordinates increasesif they are given greater responsibilities ortasks which they perceive to be important.67Building a team: The manager should ensurethat each subordinate understands his/herrole and responsibilities. The manager shouldalso make the employees understand themission of the organization, and how eachsubordinate contributes to the profitability ofthe organization. They should makesubordinates feel they are part of a team.Using standard procedures for effectivedecision-making: The manager should ensurethat the decisions made have merit, and aremade within a scheduled time frame and isaccepted by employees. For this, the managershould establish procedures for decisionmaking.Summary:1 Leadership is the ability to persuade others towork towards defined objectivesenthusiastically.2 Leadership involves the application of certainvalues.3 A person may be an effective manager - a goodplanner, and an organized administrator — butlack the motivational skills of a leader.4 Another may be an effective leader - skilled atinspiring enthusiasm and devotion — but lack9

the managerial skills to channel the energy he/she arouses in others.10

Key Elements of LeadershipIn this chapter, you will: Understand the key elements of leadership.It has been observed that every group that attains itsgoals or performs efficiently has a skilled leader.Your skills as leader comprises of four majorelements: (1) the ability to use power effectively andin a responsible manner, (2) the ability to understandthe fact that people are motivated by different forcesat different times and in different situations, (3) theability to inspire and (4) the ability to behave in amanner that will develop a harmonious work culture.Case Study: Developing Leaders at InfosysThe founders of Infosys wanted to build anorganization that would last and could operate evenunder uncertain conditions. With this in mind, theChairman of Infosys, Narayana N.R. Murthy,established an advisory body known as theManagement Council entrusted with taking strategicdecisions for the company. He noticed that duringthe management council meetings, young achieversin the company were reluctant to make suggestions.On probing further, Murthy found that theseemployees did have plenty of good-ideas, buthesitated to contribute to the discussions due to thefear of intimidating their superiors. This troubledNarayana Murthy and he decided to build aleadership institute, that would help promisingemployees at all levels to develop into leaders. Itwould also provide them opportunities to shape thefuture of lnfosys.lnfosys Leadership Institute (ILI) was created in early2001 to help promising Infoscions develop into goodleaders. The aim of Infosys was to respond to thefollowing specific challenges: To help people manage the phenomenalgrowth of the company. To make the employees of lnfosys ready for thecomplexities of the market and the dynamicexternal environment. To create greater customer value through‘thought leadership.’In lnfosys, leadership is regarded as a journey, and itbegins with the selection of high-potentialemployees. The top management identifies a pool ofcandidates on the basis of their past performance.They are also assessed for leadership potential. Eachhigh-potential employee has an ILI faculty assignedto him. The faculty members guide these employeesby developing personal development plans (PDPs)11

and by creating action plans for employees. Mosthigh potential employees are trained in one or moreleadership skills. The duration of this training is threeyears and helps high-potential employees to developinto effective leaders. Infosys employs the ‘nine pillar’model of leadership development. This model wasdeveloped after a careful analysis of the processesfollowed by 18 highly successful global corporations.Each pillar in the model has a unique relevance todevelopment of individual’s leadershipcompetencies. The nine pillars in this model are:1 360 degree feedback2 Development assignments3 Infosys culture workshops4 Developmental relationships5 Leadership skills training6 Feedback intensive programs7 Systemic process learning8 Action learning9 Community empathyAn employee can choose one or more these pillarsfor his or her personal development. The startingpoint of the leadership journey is the 360 degreefeedback. Participation in other areas is optional anddepends on the employee.360 degree feedback: This method of systematiccollection of data regarding a person’s performanceand abilities from many co-workers, including peers,direct reporters, managers, and internal and externalcustomers. Feedback thus obtained is used toprepare individual personal development plans(PDPs). These serve as guides to the individuals foracquiring new skills, and to enhance their existingskills. Each individual is assigned an ILI faculty to helphim/her draw up a PDP and put it into action.Elements of LeadershipThe first element of leadership is using power in aresponsible manner. Power is the control you canexercise over others. In other words, it is the capacityto affect the behavior of others. Leaders inorganizations typically rely on some or all of the fivemajor bases of power.12

The second element of leadership is your ability tounderstand people at a fundamental level.Understanding of motivation theories, kinds ofmotivational forces, and the nature of a system ofmotivation is not sufficient; you must also be able toapply this knowledge to people and situations. If youunderstand the elements of motivation, you shouldbe able to use your greater awareness of the natureand strengths of human needs to work out ways ofsatisfying these needs so as to get the desiredresults.The third element of leadership is your ability asleader to inspire followers to perform a task to thebest of their capacities. Although the superiors caninspire subordinates by means of various incentives,the behavior of superiors acts as a strongermotivating force. Your charismatic nature andpersonality may give rise to loyalty, devotion, and astrong desire on the part of the followers to carry outinstructions. In such a situation, the followers do notmerely try to satisfy their own needs but giveunconditional support to the leader.The fourth element of leadership concerns the styleadopted by you as a leader, and the resultinginfluence on the work climate in the group ororganization. The strength of motivation of followersis influenced by expectancies, perceived rewards, thetask to be done, and other factors that are a part ofthe work climate in an organization. Leadershipbehavior has a considerable impact on these factorsthat affect the work climate, and therefore there hasbeen a large amount of research into this area ofleadership behavior. Many management scholarsregard good leadership to be the result of anappreciation of the psychology of interpersonalrelationships. Given that the most importantfunction of managers is to design and maintain anenvironment which will help the organization toachieve its goals, a good manager-leader (you)should attempt to make the work of almost everymember in the organization more productive andsatisfying by acting on an understanding of theirunderlying motivations such as status, power,money, pride, etc. and working to fulfill them.In summary, the fundamental principle of leadershipcan be described as follows: “Since people tend tofollow those who, in their view, offer them a meansof satisfying their own personal goals, the moremanagers understand what motivates theirsubordinates and how these motivations operate,and the more they reflect this understanding in13

carrying out their managerial actions, the moreeffective they are likely to be as leaders.”Summary:1 Your skills as leader comprises of four majorelements: the ability to use power effectively and ina responsible manner, the ability to understand the fact thatpeople are motivated by different forcesat different times and in differentsituations, the ability to inspire and the ability to behave in a manner thatwill develop a harmonious work culture.14

Leadership TheoriesIn this chapter, you will: Understand the trait theory of leadership and Also understand the behavioral theoriesAttempts to explain and understand leadership haveled to the formulation of various leadership theories.There are four broad categories of leadershiptheories: trait theory, behavioral theory, situationalor contingency theory, and transformational theory.In this chapter, we will understand the Trait andBehavioral theories.Trait Theory of LeadershipIn the 1940s, most early leadership studiesconcentrated on trying to determine the traits of aleader. The trait theory was the result of the firstsystematic effort of psychologists and otherresearchers to understand leadership. This theoryheld that leaders share certain inborn personalitytraits. The earliest theory in this context was the“great man” theory, which actually dates back to theancient Greeks and Romans. According to thistheory, leaders are born, not made. Manyresearchers have tried to identify the physical,mental, and personality traits of various leaders.However, the “great man” theory lost much of itsrelevance with the rise of the behaviorist school ofpsychology.In his survey of leadership theories and research,Ralph M. Stogdill found that various researchershave related some specific traits to leadership ability.These include five physical traits (such asappearance, energy and height); four intelligenceand ability traits; sixteen personality traits (such asadaptability, enthusiasm, aggressiveness, and selfconfidence); six task-related characteristics (such asachievement, drive, initiative and persistence), andnine social characteristics (such as interpersonalskills, cooperativeness, and administrative ability).More recently, researchers have identified thefollowing key leadership traits: leadership motivation(having a desire to lead but not hungry for power),drive (including achievement, energy, ambition,initiative, and tenacity), honesty and integrity, selfconfidence (including emotional stability), cognitiveability, and an understanding of the business.In general, the study of leadership in terms of traitshas not been a very successful approach forexplaining leadership. All leaders do not possess all15

the traits mentioned in these theories, whereasmany non-leaders possess many of them. Moreover,the trait approach does not give one an estimate ofhow much of any given trait a person shouldpossess. Different studies do not agree about whichtraits are leadership traits, or how they are related toleadership behavior. Most of these traits are reallypatterns of behavior.Summary:1 The Trait theory held that leaders share certaininborn personality traits.2 When it became evident that effective leadersdid not seem to have a particular set ofdistinguishing traits, researchers tried to studythe behavioral aspects of effective leaders.Behavioral TheoriesWhen it became evident that effective leaders didnot seem to have a particular set of distinguishingtraits, researchers tried to study the behavioralaspects of effective leaders. In other words, ratherthan try to figure out who effective leaders are,researchers tried to determine what effective leadersdo — how they delega te ta sks, how theycommunicate with and try to motivate their followersor employees, how they carry out their tasks, and soon.This research grew largely out of work at theUniversity of Iowa, the University of Michigan, andthe Ohio State University. We also discuss aboutLikert’s four systems of management and theManagerial Grid. We study all of this in the followingchapters.16

Iowa and Michigan StudiesIn this chapter, you will: Iowa and Michigan studies Ohio State studiesKurt Lewin, a researcher at the University of Iowa,and his colleagues, made some of the earliestattempts to scientifically determine effective leaderbehaviors. They concentrated on three leadershipstyles: autocratic, democratic, and laissez-faire. Theautocratic leader tends to make decisions withoutinvolving subordinates, spells out work methods,provides workers with very limited knowledge ofgoals, and sometimes gives negative feedback. Thedemocratic or participative leader includes the groupin decision-making; he consults the subordinates onproposed actions and encourages participation fromthem. Democratic leaders let the group determinework methods, make overall goals known, and usefeedback to help subordinates. Laissez-faire leadersuse their power very rarely. They give the groupcomplete freedom. Such leaders depend largely onsubordinates to set their own goals and the meansof achieving them. They see their role as one ofaiding the operations of followers by furnishing themwith information and acting primarily as a contactwith the group’s external environment. They tooavoid giving feedback.To determine which leadership style is mosteffective, Lewin and his colleagues trained somepersons to exhibit each of the styles. They were thenplaced in charge of various groups in apreadolescent boys’ club. They found that on everycriterion in the study, groups with laissez-faireleaders underperformed in comparison with boththe autocratic and democratic groups. While theamount of work done was equal in the groups withautocratic and democratic leaders; work quality andgroup satisfaction was higher in the democraticgroups. Thus, democratic leadership appeared toresult in both good quantity and quality of work, aswell as satisfied workers.Later research, however, showed that democraticleadership sometimes produced higher performancethan did autocratic leadership, but at other timesproduced performance that was lower than ormerely equal to that under the autocratic style. Whilea democratic leadership style seemed to makesubordinates more satisfied, it did not always lead tohigher, or even equal, performance.17

These findings put managers in a dilemma overwhich style to choose. Moreover, many managers arenot used to operating in a democratic mode. To helpyou decide which style to choose, particularly whendecisions had to be made, management scholarsRobert Tannenbaum and Warren H. Schmidt deviseda continuum of leader behaviors (see below figure).How to Choose a Leadership PatternThe continuum depicts various gradations ofleadership behavior, ranging from the boss-centeredapproach at the extreme left to the subordinatecentered approach at the extreme right. A moveaway from the autocratic end of the continuumrepresents a move towards the democratic end andvice versa. According to Tannenbaum and Schmidt,while deciding which leader behavior pattern toadopt, a manager should consider forces withinthemselves (such as their comfort level with thevarious alternatives), within the situation (such astime pressures), and within subordinates (such asreadiness to assume responsibility). The researcherssuggested that in the short term, depending on thesituation, you should exercise some flexibility in theirleader behavior. However, in the long run, youshould attempt to move towards the subordinatecentered end of the continuum, as such leaderbehavior has the potential to improve decisionquality, teamwork, employee motivation, morale, andemployee development.Further work on leadership at the University ofMichigan seemed to confirm that the employeecentered approach was much more useful ascompared to a job-centered, or production-centeredapproach. In the employee-centered approach, thefocus of the leaders was on building effective workgroups which were committed to delivering highperformance. In the job-centered approach, the workwas divided into routine tasks and leaders monitoredworkers closely to ensure that the prescribed18

methods were followed and productivity standardswere met. There were still variations in the level ofthe output produced. Sometimes the job-centeredapproach resulted in the production of a higheroutput as compared to the employee-centeredapproach. Therefore, no definite conclusions couldbe drawn and further studies appeared necessary.Ohio State StudiesIn 1945, a group of researchers at Ohio Universitybegan extensive investigations on leadership. Theyinitiated the process by identifying a number ofimportant leader behaviors. The researchers thendesigned a questionnaire to measure the behaviorsof different leaders and track factors such as groupperformance and satisfaction to see which behaviorswere most effective. The most publicized aspect ofthe studies was the identification of two dimensionsof leadership behavior: ‘initiating structure’ and‘consideration.’ Initiating structure is the extent towhich a leader defines his or her own role and thoseof subordinates so as to achieve organizational goals.It is similar to the job-centered leader behavior of theMichigan studies, but includes a broader range ofmanagerial functions such as planning, organizing,and directing. It focuses primarily on task-relatedissues. Consideration is the degree of mutual trustbetween leader and his subordinates; how much theleader respects subordinates’ ideas and showsconcerns for their feelings. Consideration is similarto the employee-centered leader behavior of theMichigan studies. It emphasizes people-relatedissues. A consideration-oriented leader is more likelyto be friendly towards subordinates, encouragesparticipation in decision—making, and maintainsgood two-way communication.As opposed to the Iowa and Michigan studies, whichconsidered leadership dimensions, i.e. employeecentered approach and job-centered approach, asthe two opposite ends of the same continuum, theOhio State studies considered initiating structure andconsideration as two independent behaviors.Therefore, the leadership behaviors operated onseparate continuums. A leader could thus be high onboth the dimensions, or high on one dimension andlow on the other, or could display gradations inbetween. This two-dimensional mode of leader’sbehavior made sense as many leaders display bothinitiating structure and consideration dimensions.The Ohio State two-dimensional approach is shownin the figure.19

State Model of Leader BehaviourThe two-dimensional approach led to the interestingprobability that you, as leader, might be able to placeemphasis on both task and people-related issues.You may be able to produce high levels ofsubordinate satisfaction by being considerate, and atthe same time can be specific about the resultsexpected, thereby focusing on task issues too.However, this theory was too simplistic. It laterbecame apparent that situational factors like thenature of the task and the expectations ofsubordinates affected the success of leadershipbehavior.Summary:1 The autocratic leader tends to make decisionswithout involving subordinates, spells out workmethods, provides workers with very limitedknowledge of goals, and sometimes givesnegative feedback.2 The democratic or participative leader includesthe group in decision-making; he consults thesubordinates on proposed actions andencourages participation from them.3 Laissez-faire leaders use their power veryrarely. They give the group complete freedom.4 Initiating structure is the extent to which aleader defines his or her own role and those ofsubordinates so as to achieve organizationalgoals.5 Consideration is the degree of mutual trustbetween leader and his subordinates; howmuch the lea

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